The Problem

Developed more than four decades ago, the Pell Grant program has expanded in sheer numbers without evolving structurally. While it continues to encourage recent high school graduates from poor families to undertake various forms of higher education, today’s limited funding prospects, low degree-completion rates, and workforce realities demand that the program be redesigned.

The Proposal

If the Pell Grant program were reimagined as a more collaborative effort between the federal government and grantees, wherein financial support was augmented with academic- and labor-oriented support services, it would yield greater benefits to students. Streamlined eligibility and application procedures, coupled with personalized counseling support and stronger incentives for student effort and completion, would boost the program’s effectiveness without a substantial increase in cost.

Abstract

Since its inception in 1972, the Pell Grant program has expanded dramatically in size and scope. With 9.4 million individuals receiving $35 billion in funds in 2011–12 for programs ranging from short-term certificates in automotive technology to four-year degrees in art history, the program is the federal government’s flagship effort to develop both general human capital and specific workforce skills. Yet the structure of the program—a one-size-fits-all voucher originally designed for recent high school graduates from poor families—has remained fundamentally unchanged. In the face of growing concerns about the sustainability of current funding, as well as increasing frustration with low rates of degree completion, we argue that the time has come to comprehensively redesign the Pell program to fit the needs of a twenty-first-century economy and student population.

To accomplish this, we propose three major structural reforms. First, we propose to augment the Pell program’s financial support with tailored guidance and support services that have been shown to improve academic and/or labor-market success, including separately tailored services for the distinctive circumstances of dependent and independent recipients. Second, we propose to dramatically simplify the eligibility and application process to ensure that the program reaches those who need it most, again tailoring the simplification to the distinctive circumstances of dependent and independent students. Finally, we propose several modifications to strengthen incentives for student effort and timely completion, without leading the program away from its core need-based (not merit-based) mission.

Taken together, the reforms that we propose would for the first time make Pell a true program, and not just a grant, thus inducing its beneficiaries to become full participants, and not just recipients. Although our proposed reforms are substantial, the existing structures for processing and delivering Pell Grants would continue to be relevant, and the goals of Pell supporters and beneficiaries would be furthered. Finally, while significant congressional action would be required in order to implement our proposal, these reforms would not substantially increase the cost of the program, and we believe they are structurally and politically feasible.